Start Investing Online Today
Unexpectedly high global inflation, along with a re-evaluation of Federal Reserve policies and an increase in bond yields, led to a notable decline in equity markets in April.
Global equities continued their upward trajectory, buoyed by robust economic indicators and earnings, with a 3% rise in March and a quarterly gain of 14.1%,the strongest since 2013.
Economic Snapshot: Markets rise as inflation eases
Australian equities rose further in January with a 1.2% lift, taking the 3-month advance to 14 %. Banks continued to lead the charge, rising 5.3% with insurance up 5.9% and energy 5.2%.
After lagging markets for much of the year, Australian stocks rebounded sharply in December, rising 7.3% to close at record levels. Interest rates and inflation remain the key data points in focus.
Global equities rose by 9.4% in November, the largest monthly gain since the 2020 COVID recovery, driven by signs of economic moderation in the US and disinflation in developed markets.
Global equity markets dropped a further 2.9% in October taking the year-to-date return to 8.2%. Bond yields continued to climb, undermining valuations across a range of assets, while the Israel-Hamas conflict added to uncertainty and risk aversion.
Investor sentiment turned in September with inflation data suggesting there were risks of further interest rate hikes ahead to cool ongoing consumer price pressures.
Inflation slowed to 4.9% in July, down from 5.4% in June, which cemented expectations of a pause in interest rates.
Global equities rose 2.1% in the month, with a 20% year-to-date gain in AUD terms. Value, small caps, and cyclical-stocks led the rally.
Global equity markets rose 3.1% in June, with a 7.6% return for the quarter. The rally included growth stocks, the IT sector, banks, retailers, small caps, REITs, and materials.
We are witnessing a significant shift in generational wealth accumulation and concerns that the next generation could be the first since Federation to be worse off than their parents.
The RBA raised the cash rate by 25 basis points to 4.1% in early June, the second increase since April.
In April, global developed equities saw a slight positive tone, rising by 1.8%, with Europe ex-UK being the standout performer.
Global equity markets rose in March after a tough February.
Global investors faced a reality check in February, reflecting a more cautious view on upcoming central bank decisions.
Financial markets started the year on an upbeat note, with rallies across the board in January. However, the economic data is mixed.
The big question for 2023 is how much damage has been done to economic growth by the higher interest rates designed to tame inflation?
Markets were in a more buoyant mood in November, hoping the worst of the interest rate hikes may be over.
Financial markets respite from previous months on hopes that central banks may slow the pace of interest rate increases
Ongoing strength in the US economy, including higher than expected inflation, led the Federal Reserve to adopt a more aggressive stance on interest rates.
The rally enjoyed by financial markets in July came to an abrupt halt in August, with the key driver the outlook for US interest rates.
After the turmoil of previous months, markets took a more positive tone in July with both bonds and equities posting solid gains.
When inflation and interest rate are impacting all asset classes at once, it’s difficult to remember that it’s normal for investment returns to vary greatly from year to year and still grow over the long-term.
A combination of strong growth, abundant liquidity, supply chain blockages, and the Ukraine war triggered the biggest resurgence of inflation since the early 1980’s.
May was a volatile month for global financial markets as investors continued to grapple with the array of risks confronting them.
April was a harsh month for financial markets. High inflation, aggressive rhetoric from the US Federal Reserve Bank, the Ukraine war and COVID lockdowns in China, all combined to sour investor sentiment.
In a turbulent month for global markets, Australia’s geographic distance from Ukraine, combined with our role as a commodity exporter, helped our equity market to outperform and the A$/US$ to rally.
